Aye Mike... Thats a nice fat present the X dropped on you. Sounds like a tranny problem to me. If it was Trans Case, you would still have RWD and the shift points would be fine. But since you get grinding and thuds ad surges... Sounds like the clutch packs are slipping and once enough pressure builds up, it catches and you get the surge. If the RPMS get high enough and it catches, it may be too fast and thats where the grinding comes in.

Just so I understand, your thoughts are to junk to 4.8 and do a switch to make the 4.4 into a 4.8is? Minus the engine? Hopefully you can get this figured out.

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2011 E70 50i M Sport